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Zimbabwe lowers diamond earnings forecast

Oct 17 2012 16:54

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Harare - Zimbabwe has lowered its projected $600m earnings from diamond sales after miners cut production in response to a decline in diamond prices on the international market, the mines minister said Wednesday.

"The $600m target has now been affected," Obert Mpofu told journalists.

Mpofu said that over the "past three to four months the diamond prices have actually gone down".

"When the prices go down, producers also reduce their production capacity. They cannot produce at a loss."

Mpofu did not give the new target for diamond sales.

In July, Finance Minister Tendai Biti complained about the low revenue trickle from diamond sales saying by mid-year only $46m had been realised against the year's anticipated $600m.

That forced him to slash the 2012 budget spending target by 10% to $3.6bn.

He said earnings from key minerals such as gold and diamonds were not making it into state coffers.

Natural resource extraction watchdogs have accused President Robert Mugabe's ruling party of funneling profits from Marange diamonds to senior military officers and party leaders.

Diamond watchdog Kimberley Process has given the country the green light to sell its gems despite opposition from rights groups and Western nations.

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